SEC issues rule cracking down on 'greenwashing' by investment funds
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Wall Street's top regulator on Wednesday adopted a new rule cracking down on so-called «greenwashing» and other deceptive or misleading marketing practices by U.S. investment funds.
The changes to the two decades-old Securities and Exchange Commission (SEC) «Name Rule» requires that 80% of a fund's portfolio matches the asset advertised by its name.
It takes aim at a boom in funds that have tried to exploit investor interest in environmental, social and governance, or ESG, investing with names that do not accurately reflect its investments or strategies.
«A fund’s investment portfolio should match a fund’s advertised investment focus,» SEC chair Gary Gensler said on Wednesday at a meeting to vote on the rule. «Such truth in advertising promotes fund integrity on behalf of fund investors.»
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The Securities and Exchange Commission (SEC) issued a new rule cracking down on greenwashing by investment funds. (SAUL LOEB/AFP via Getty Images / Getty Images)
The SEC since 2021 has also focused on prosecuting ESG-related misconduct and «greenwashing», bringing enforcement actions and levying fines.
Financial reform advocates say billions of dollars are now invested in popular funds that may actually support fossil fuel production and do not meet the ESG goals suggested by their names, which can change frequently.
The rule also targets funds with names suggesting a focus on particular characteristics, like «growth» and «value,» or particular economic themes or investment strategies, such as
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